UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Quarter Ended September 26, 1999 Commission file Number 0-1830
BOWL AMERICA INCORPORATED
(Exact name of registrant as specified in its charter.)
MARYLAND 54-0646173
(State of Incorporation) (I.R.S. Employer Identification No.)
6446 Edsall Road, Alexandria, Virginia 22312
(Address of principal executive offices) (Zip Code)
(703)941-6300
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Shares Outstanding at
October 24, 1999
Class A Common Stock, 3,656,741
$.10 par value
Class B Common Stock 1,505,826
$.10 par value
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Thirteen Weeks Ended
September 26, September 27,
1999 1998
_______________________
<S> <C> <C>
Operating Revenues
Bowling and other $4,259,257 $3,837,591
Food, beverage and merchandise sales 1,707,782 1,569,635
_________ _________
5,967,039 5,407,226
Operating Expenses
Compensation and benefits 2,858,123 2,767,519
Cost of bowling and other 1,499,477 1,451,511
Cost of food,beverage and mdse sales 527,178 508,458
Depreciation and amortization 559,385 580,511
General and administrative 193,132 211,894
_________ _________
5,637,295 5,519,893
Operating Income (Loss) 329,744 (112,667)
Interest and dividend income 202,057 164,618
_________ _________
Earnings before provision
for income taxes 531,801 51,951
Income tax provision 185,040 13,470
_________ _________
Net Earnings $ 346,761 $ 38,481
Earnings per share $ .07 $ .01
Weighted average shares
outstanding 5,222,967 5,651,497
Dividends paid $551,763 $565,650
Per share, Class A $.105 $.10
Per share, Class B $.105 $.10
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
Net Earnings $346,761 $ 38,481
Other comprehensive earnings net of tax
Unrealized gain on available-for-sale
securities 192,119 189,638
_______ _______
Comprehensive earnings $538,880 $228,119
</TABLE>
The operating results for these thirteen (13) periods are not
necessarily indicative of results to be expected for the year.
See notes to financial information.
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 26, 1999 June 27, 1999
__________________ _____________
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,761,225 $ 1,557,225
Short-term investments 7,242,842 7,690,576
Inventories 786,344 618,875
Prepaid expenses and other 565,707 482,279
Income taxes refundable - 89,194
Deferred income taxes 15,000 15,000
__________ __________
Total Current Assets 10,371,118 10,453,149
Property, Plant and Equipment
less accumulated depreciation of
$24,153,522 and $23,703,234 20,458,306 20,908,976
Other Assets
Marketable equity securities 9,816,824 9,506,955
Cash surrender value-life insurance 387,716 384,925
Other long-term assets 256,086 493,931
__________ __________
TOTAL ASSETS $41,290,050 $41,747,936
</TABLE>
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 26, 1999 June 27, 1999
__________________ _____________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 528,623 $ 738,040
Accrued expenses 841,796 977,400
Income taxes payable 95,376 -
Other current liabilities 581,745 349,051
__________ __________
Total Current Liabilities 2,047,540 2,064,491
Noncurrent Deferred Income Taxes 4,323,750 4,206,000
TOTAL LIABILITIES 6,371,290 6,270,491
__________ __________
Stockholders' Equity
Preferred stock,
par value $10 a share: Authorized
and unissued 2,000,000 shares
Common stock,
par value $.10 per share
Authorized 10,000,000 shares
Class A issued and outstanding -
3,671,741 and 3,746,171 shares 367,173 374,617
Class B issued and outstanding -
1,505,826 and 1,508,716 150,582 150,871
Additional paid-in capital 4,179,920 4,265,443
Unrealized gain on securities
available-for-sale, net of tax 5,478,049 5,285,930
Retained earnings 24,743,036 25,400,584
__________ __________
TOTAL STOCKHOLDERS' EQUITY $34,918,760 $35,477,445
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $41,290,050 $41,747,936
<FN>
See notes to financial information.
</TABLE>
<PAGE>
<TABLE>
BOWL AMERICA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED SEPTEMBER 26, 1999 AND SEPTEMBER 27, 1998
<CAPTION>
September 26, September 27,
1999 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 346,761 $ 38,481
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 559,385 580,511
Changes in assets and liabilities
Increase in inventories (167,469) (138,878)
Increase in prepaid and other (83,428) (164,175)
Decrease in other long-term assets 235,054 54,356
(Decrease) increase in accounts payable (209,417) 165,086
(Decrease) increase in accrued expenses (135,604) 14,967
Increase in income taxes payable
(refundable) 184,570 (15,532)
Increase in other current liabilities 234,025 210,195
_________ _________
Net cash provided by
operating activities $ 963,877 $ 745,011
_________ _________
Cash flows from investing activities
Expenditures for property,plant,equip (108,715) (428,430)
Net decrease in short-term investments 447,734 494,642
_________ _________
Net cash provided by
investing activities 339,019 66,212
_________ _________
Cash flows from financing activities
Payment of cash dividends (551,763) (565,650)
Purchase of Class A common stock (526,903) (109,230)
Purchase of Class B common stock (20,230) -
_________ _________
Net cash used in financing activities (1,098,896) (674,880)
_________ _________
Net Increase in Cash and Equivalents 204,000 136,343
Cash and Equivalents, Beginning of Qtr 1,557,225 1,944,462
_________ _________
Cash and Equivalents, End of Quarter $1,761,225 $2,080,805
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Income taxes $ 470 $ 29,003
<FN>
See notes to financial information.
</TABLE>
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
For the Thirteen Weeks Ended
September 26, 1999
1. Consolidated Financial Statements
The consolidated balance sheets as of September 26, 1999, and
the consolidated statements of earnings and comprehensive earnings and
cash flows for the three-month periods ended September 26, 1999 and
September 27, 1998 have been prepared by the Company, without audit.
This quarterly financial information is submitted in response
to the requirements of Form 10-Q and does not purport to be
financial statements prepared in accordance with generally accepted
accounting principles. They therefore do not include all
disclosures which might be associated with such statements.
The information included in this Form 10-Q should be read in conjunction
with the financial statements and notes thereto for the year ended
June 27, 1999, included in the Company's Annual Report on Form 10-K.
In the opinion of management such information includes all
adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position at September 26,
1999, and for all periods presented.
For a summary of significant accounting principles, which have
been continued without change refer to Note 1 to the financial
statements for the year ended June 27, 1999.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
September 26, 1999
Liquidity and Capital Resources
Short-term investments consisting mainly of U.S. Treasury Bills
and Notes, and cash totaled $9,004,000 at the end of the first
quarter of fiscal 2000 or $244,000 lower than at the beginning
of the quarter.
The Company expended $547,000 for the purchase of 77,320 shares of
previously outstanding common stock. Subsequent to the end of the
quarter, an additional 15,000 shares of Bowl America stock were
purchased at a cost of $105,000.
Currently the Company has a signed contract with contingencies for
approval of permits on one location and is negotiating a contract on
another site. The Company continues to seek viable properties. Cash
and cash flow are sufficient to finance all currently planned purchases
and construction. The Company has maintained its fiscal year end 1999
position in marketable securities, primarily telecommunications stocks,
as a further source of expansion capital except as noted below.
These securities are carried at their fair value on the last day of the
quarter. For the three-month period ended September 26, 1999, the market
value increased by approximately $310,000 with a net after tax gain
of $192,000. During the quarter AirTouch Communications, one of the
stocks held by the Company, was acquired by Vodafone in an exchange for
stock and cash resulting in a payment to Bowl America of $49,000. There
are three other mergers of telecommunication companies pending which
could result in cash payments as well.
While no factors requiring a change in the dividend rate are apparent,
the Board of Directors decides the amount and timing of any dividend
at its quarterly meeting based on its appraisal of the state of the
business and its estimate of future opportunities.
The Company closed a center operating with a negative cash flow in
May 1999.
Results of Operations
Generally, due to the seasonal nature of bowling, July and August do
not produce profits. This year, both months were profitable making this
the best first quarter in the Company's history. However, it should be
noted that the earnings increase is not necessarily indicative of results
to be expected for the year as the impact of increased open play linage
is less evident in winter months.
Revenues, profits, expenses and percentage comparisons shown in this
report were influenced by the closing of a center, noted above.
There was a $.07 per share profit for the thirteen-week period ending
September 26, 1999, versus $.01 per share in the first quarter of last year.
Increases in open play and special event bowling in the current year period
contributed to improvements in almost every income category more than
offsetting the decline in league bowling. Operating revenues increased
over 10% in the current period versus a slight decrease in the prior year
period.
Food, beverage and merchandise sales were up 9% and costs were up 4% due
to the higher volume of traffic.
Operating expenses excluding depreciation and amortization increased 3%
in the current quarter versus a 1% decrease in the comparable quarter
last year. Advertising costs increased 17% from the prior year period
as we increased our television advertising in support of glow-in-the-dark
bowling. Equipment expense increased in the current year by 10% and 21%
in the prior year period primarily due to the higher costs associated with
bowling pins and rental shoes. Employee compensation and benefits expenses
were up 3% this year and down 1% in the prior year.
Depreciation and amortization expense decreased 4% in the current year
quarter versus an increase of 5% in the comparable period last year.
The increase last year was partially due to amusement game machine
and glow-in-the-dark equipment purchases. Rent expense decreased 12% in
the current period due primarily to closing of a leased location. Last
year rent expense increased 5% mainly as a result of higher sales at
some leased locations.
YEAR 2000
Preparing for Year 2000 has been a priority for Bowl America. The
Company has reviewed its compurterized operations including the
hardware and software of its main computer system as well as bowling
center autoscoring systems. The operating system and all significant
software of the corporate computer are Year 2000 ready. The autoscoring
systems have been upgraded to be ready. Because Bowl America does not
rely heavily on date sensitive calculations for its internal operations,
the cost of remediation has not been material, less than $100,000.
We are continuing to receive compliance information from our material
vendors on their progress. Many are currently Year 2000 ready while
others continue to state they will be ready on a timely basis.
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
S.E.C. FORM 10-Q
September 26, 1999
PART II - OTHER INFORMATION
An 8K was filed in July 1999, which referred to changes
in an employment contract.
<PAGE>
BOWL AMERICA INCORPORATED AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BOWL AMERICA INCORPORATED
Registrant
November 9, 1999 Leslie H. Goldberg
Date Leslie H. Goldberg
President
November 9, 1999 Cheryl A. Dragoo
Date Cheryl A. Dragoo
Controller
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<CURRENCY> U.S. DOLLARS
<EXCHANGE-RATE> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-02-2000
<PERIOD-END> SEP-26-1999
<CASH> 1,761
<SECURITIES> 9,817
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 786
<CURRENT-ASSETS> 10,371
<PP&E> 44,612
<DEPRECIATION> 24,153
<TOTAL-ASSETS> 41,290
<CURRENT-LIABILITIES> 2,048
<BONDS> 0
0
0
<COMMON> 518
<OTHER-SE> 34,401
<TOTAL-LIABILITY-AND-EQUITY> 41,290
<SALES> 1,708
<TOTAL-REVENUES> 5,967
<CGS> 527
<TOTAL-COSTS> 5,637
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 532
<INCOME-TAX> 185
<INCOME-CONTINUING> 347
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<EPS-BASIC> .07
<EPS-DILUTED> .07
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